Hospital merger could reduce patient costs

LA CROSSE, Wis. (WXOW) – The potential merger of two major health care systems in Wisconsin could lead to lower costs for patients, according to their CEOs.

Gundersen Health System and Marshfield Clinic are working on merging. The American Hospital Association (AHA) said new research finds recent hospital mergers result in significant costs savings and quality improvements that cannot be replicated by looser affiliations.

Mergers decrease costs due to economies of scale, reduced costs of capital and clinical standardization among other efficiencies. An empirical analysis showed a 2.5 percent reduction-equating to $5.8 million-in annual operating expenses at acquired hospitals, according to the AHA.

Mergers have the potential to drive quality improvements through standardization of clinical protocols and investments to upgrade facilities and services at acquired hospitals. Mergers typically expand the scope of services available to patients, and build upon existing institutional strengths to provide more comprehensive and efficient care.

“I think that we can work on our services and how to better deliver those across the whole continuum of care and ultimately together and larger we really hope to bring the cost of care down by working with those efficiencies and bringing that directly to our patients,” said Dr. Scott Rathgaber,MD, Gundersen Health System CEO.

Historically, hospital mergers have increased the average price of hospital services by between 6 percent and 18 percent, according to the National Council on Compensation Insurance.

The merger would make an impact on rural healthcare. Susan Turney, Marshfield Clinic Health System CEO, said, “We will, I believe, be the largest rural healthcare system in the country at that time. We know rural health. We do a really good job with rural health and there are unique needs in our communities because of where we’re located geographically, so those are the reasons we came together to really meet our mission.”